NJ suspends PokerStars' online gambling plans

ATLANTIC CITY, N.J. (AP) - New Jersey casino regulators dealt a losing hand Wednesday to the world's largest online poker website, barring PokerStars from conducting Internet gambling in the state for two years.

The state Division of Gaming Enforcement suspended the company's application, citing an unresolved federal indictment against company founder Isai Scheinberg.

''The Division's determination is based primarily on the unresolved federal indictment against Isai Scheinberg for the alleged violation of federal gambling statutes, namely, the Illegal Gambling Business Act and the Unlawful Internet Gambling Enforcement Act (UIGEA), and the involvement of certain PokerStars executives with Internet gaming operations in the United States following the enactment of UIGE,'' the division said in a statement Wednesday.

The state said PokerStars can reapply sooner than two years if its circumstances change materially, but the state didn't recommend specific changes.

A PokerStars spokesman could not predict whether the company plans to make the type of changes envisioned by New Jersey regulators.

''We are disappointed that the New Jersey Division of Gaming Enforcement has suspended the review of our application at this time,'' spokesman Eric Hollreiser said. ''We note that the DGE will resume the review of our application if our circumstances change. We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.''

Resorts Casino Hotel, which had partnered with PokerStars in anticipation of offering Internet gambling, won't say if it is seeking another online partner.

''We are disappointed that PokerStars was not issued a license,'' Resorts president Mark Giannantonio said. ''We are hopeful that they can resolve their issues with the DGE in an expeditious fashion.''

The gambling enforcement division issued an Internet gambling permit to Resorts on Wednesday, but the casino has no obvious online partner to offer it, at least right away.

Six Atlantic City casinos - the Borgata Hotel Casino & Spa, the Tropicana Casino and Resort; Trump Plaza Hotel and Casino; the Trump Taj Mahal Casino Resort; Caesars Atlantic City and Bally's Atlantic City - are offering online gambling. The Golden Nugget Atlantic City has an Internet gambling permit but has not yet begun offering games as it works out problems with its systems.

PokerStars also had trouble in its attempt to purchase The Atlantic Club Casino Hotel last year. Part of the reason the $15 million proposed sale fell through is that PokerStars did not get approval from New Jersey regulators within the timeframe both sides anticipated.

The company, owned by The Rational Group, based in Isle of Man in the U.K., still has many fans in the online poker community.

''In truth I'd like PokerStars to come back; I so would,'' said Kevin Campbell of Bayonne, who says he has been unable to log on to any of the gambling websites New Jersey offers, and feels their guaranteed prize pools are too low.

PokerStars, he said, ''had a $5 million guarantee Sunday; 16,000 people played. None in America though. Home of the free, huh? They block out the biggest and best poker company in the world.''
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Wayne Parry can be reached at http://twitter.com/WayneParryAC

Setback for PokerStars as New Jersey Bars Licensing for Two Years

PokerStars got a smack from New Jersey regulators this week when they put them in licensing limbo for the next two years

If there’s one name that has dominated the American online poker market over the last decade, it has to be PokerStars. But if you’re living in New Jersey, you shouldn’t expect to be playing on a site operated by the poker giant any time soon.

Two Years in Limbo

The New Jersey Division of Gaming Enforcement made a decision this week to suspend the review of PokerStars’ application for an online gambling license for two years, effectively locking the company out of the state’s online poker marketplace for that time period.

“The Division of Gaming Enforcement has determined that the application of Rational Services Limited (PokerStars) casino service industry licensure (CSIE) will be held in a suspended status for a period of two years,” the Division said in a statement.

However, the door is not entirely closed on PokerStars.

“The Division, within that period, may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated, at which time the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.”

Bad Company, Bad Actor

Although PokerStars has long settled its case with the federal government – and admitted no wrongdoing as a part of that settlement – New Jersey regulators still have some issues with the company. Chief among those appears to be their association with founder Isai Scheinberg, who has been under federal indictment since Black Friday. Scheinberg is not a U.S. citizen, and has not come to the U.S. to face those charges, to nobody’s surprise.

While this is a huge loss for PokerStars, it also marks a huge win for its competitors in the New Jersey market. As we reported recently, the site run by PartyPoker jointly with the Borgata Casino currently has a 50 percent share of the state’s poker marketplace, with the Caesars/888 World Series of Poker site not far behind. Those two companies could easily have been overshadowed by the PokerStars site – which would have been operated in conjunction with Resorts Casino – and were hoping that their head start would give them an advantage that would allow them to remain competitive. Now, they’ll have at least two years to build up brand loyalty, something that PokerStars may have a difficult time overcoming, if and when they are finally licensed for New Jersey’s online marketplace.

PokerStars was predictably not thrilled by the news, though they noted that the state’s decision could change in the future.

“We are disappointed that the N.J. Division of Gaming Enforcement has suspended the review of our application at this time,” said PokerStars spokesman Eric Hollreiser in a statement. “We note that the DGE will resume the review of our application if our circumstances change. We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.”

This was not the first disappointing result for PokerStars in New Jersey. Previously, the company had attempted to purchase the Atlantic Club Casino, only to have that deal fall apart over questions about whether regulators would approve the purchase. That decision was also costly, as PokerStars lost about $11 million they had spent on casino expenses – a total that was meant to be applied to the eventual $15 million purchase price.